Objective, impartial advice for Property Investors and Landlords with a focus on the Edinburgh area

Tuesday, 13 June 2017

The Edinburgh property market – how will a hung UK Parliament impact it?

The thing about the unexpected is that the more
‘unexpectedness’ there is the more the unexpected becomes the expected. Therefore, whilst the UK General Election
result on Friday morning might have been unexpected, it was less of a shock
that the other ‘unexpected’ voting results we have had recently like the UK
voting for Brexit and the American people voting for Donald Trump.

So, the UK people have spoken which means that life is
all sorted now and we can get back to normal living then?

Well, not quite.
There are still a few ‘small’ UK wide matters to sort – What will the
deal between the Conservatives and DUP look like? Will ‘gambler’ Theresa May be
replaced as Prime Minister and, if so, by whom? and Will we have another
General Election within the next 9 months to name but a few.

And then, of course, there is the Scottish specific
issue of the ‘staggering’ losses suffered by the SNP which were so staggering
that they are only eclipsed by the significantly more staggering gains by the
SNP at the 2015 General Election only a couple of years ago. Tactical voting, I hear you say. Well, interestingly, probably not as whilst
the SNP are still the largest party in Scotland their share of the vote dropped
from 50% to 37% which is significantly below the 45% who voted Yes in IndyRef 1
and the 50.1% needed to vote for Independence.

So what does all this mean for the Edinburgh property
market? Well, there is the detail and
then there is the big picture.

Taking the detail first.

From a UK perspective, the UK Government will be so
terribly focussed on the Brexit negotiations that I suspect little will
fundamentally change domestically for a couple of years at least. However, if it does, then we have a
Conservative led Government whose manifesto seems to suggest little
change. I suspect that I would be
having more to say if Jeremy Corbyn’s Labour Government had won the Election.

Turning to Scotland.
The Election losses suffered by the SNP and the fairly constant
accusations against them during the Election that the SNP Government needs to
do a better ‘day job’, will mean that the Scottish Government will re-double
its efforts to deliver on its key 2016 Election pledges around Education, the
NHS and Housing. Given that Housing is
the least ‘oil tanker’ like of these three, I suspect that the Scottish
Government will focus hard on trying to achieve their key Housing pledges:

Building 50,000 affordable homes by 2021.As I have gone on about before, whilst this
is welcome, it is not enough homes to begin to solve the current housing crisis
– at best, it will stop it getting worse.

Rural Housing Fund.This is effectively more affordable homes.

Restoration of Housing Support to 18-21 year-olds.This will help 18-21 year- olds get their own
homes thereby increasing demand for housing.

These key objectives, which are already out there, will
not fundamentally change the Edinburgh housing market.

And then there is taxation. Property owners have been ‘fair game’ for tax
increases over the last few years and this may well continue. However, it is worth noting that the Conservative
UK Government is likely to be less bad than a Labour UK Government and the SNP
have worked out that most of the taxes that they can change are likely to bring
them in less money if they increase them and so are less likely to do so.

And now the big picture.

Last Thursday’s Election result has not affected the
biggest current problem in the current Edinburgh property market which is that
demand is increasingly outstripping supply ie there are just not enough
homes. Given this, it is business as
usual.

Also, the Edinburgh housing market has survived many,
much bigger, shocks than last Thursday’s Election result including the 2007 Financial Crash, the Brexit Referendum
vote and Trump winning the American Election.

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This blog follows the buy to let market in Edinburgh. You'll find tips, guidance, and analysis that relates specifically to Edinburgh and you'll also find properties from all the estate agents in the city on here that may make decent investments.

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Robert Young

I operate The Key Place and if you're thinking of buying a property to let in Edinburgh, I'll be happy to advise or just offer a second opinion. I can be contacted on news@thekeyplace.co.uk, or 0131 603 4570.